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Ledgers: While discussing about general ledger is refers to company that should follow different organizational structure rather than cashbook. Through ledger it is possible to separate down the finance of company into various accounts such as expenses, assets, liability, revenue and equity. Individual transactions that would include payments or receipts are mentioned into proper account in case ledger gets updated. Transactions can occur from general ledger to another. Supposedly, an accountant is responsible for categorizing payments that is received in advance for delivery of goods as liability and account labeled as “unearned revenue.”
Cashbook: Businesses usually make use of cashbook so that it becomes easier to keep track of various cash receipts and payments which may occur in company. Most individuals are in favor of balancing personal cashbooks and a business cashbook may be required for payments as credits and expenditure as debits. The accountant has to record cashbook transactions as they happen within debit and credit columns respectively.
Making use of cashbook
The first entry in cashbook proves the starting balance of any accounting period. It is essential that the entry in book would mention along with date, particulars about different expenditure or receipt and also the total transaction amount. The cashbook would also include small box which would indicate page of ledger that can correspond to entry. It is a box that is labeled as “L.F.” for “Ledger Folio” in dedicated cashbook.
Ledger posting from debit side
The debit side mentioned in cash book includes all cash receipts. The postings are made in ledger accounts that would appear at debit side of cash book. Cash is obtained through these accounts and so cash account can be debited. The debit side reflects cash accounts which have been debits for receipts and so the accounts at debit side will be credited while receiving cash.
It is referred that posting in account would appear at debit side and it should be made at credit side of account by referring it as ‘by cash a/c’. It is because that there is no chance of using name of same account when it is own ledger account.
Ledger posting from credit side
The accounts that appear at credit side of cash book can surely be prepared separately. Posting can be done to debit side of accounts which can help in completing double entry record. Credit side found in cash book reflects all kind of cash payments which appears at credit side. Purchase accounts, furniture account and wages account can be debited only when payments are made to them and posting is done at debit side of accounts.
Links of Previous Main Topic:-
- Book keeping
- Meaning of gaap
- Origin of transaction
- The concept of debit and credit
- Subsidiary books or sub division of journal
- Balancing of ledger accounts
- Classification of ledger accounts
- Distinction between journal and ledger
- Importance or advantages of ledger accounts
Links of Next Accounting Topics:-
